Bank bailout pushes UK's national debt to £2.1trillion

BAILING out the banks will send the national debt rocketing to £2.1TRILLION - equivalent to £35,000 for every man, woman and child in Britain.

BAILING out the banks will send the national debt rocketing to £2.1TRILLION - equivalent to £35,000 for every man, woman and child in Britain.

We already owe a record £703.4billion, nearly half of the country's output and well over the Government's 40 per cent target.

But the multi-billionpound rescue of RBS and HBOS must be added to the Treasury balance sheet, the Office for National Stastistics said.

And Government borrowing for the first 10 months of this year has already hit a record £67.2billion.

When the bailed-out banks' liabilities are added, total debt breaks through the £2000billion barrier.

Shadow business secretary Ken Clarke said the figures were "off the Richter scale".

Tax revenues have also plummeted as a result of soaring unemployment and businesses going bust, piling pressure on the nation's finances.

Experts believe Chancellor Alistair Darling will have to rip up his economic predictions when he delivers his Budget speech in April.

And they said ministers may be forced to cut public spending, raise taxes or even do both. Money expert Jonathan Loynes said: "January's figures confirm that the downturn in the economy is starting to hit very hard indeed.

"At this rate, borrowing will total close to £100billion this year, more than £20billion above Mr Darling's pre-Budget forecast."

But Treasury minister Angela Eagle said Tory calls for the Government to rein in spending in a bid to balance the books were "a recipe for complete disaster".

She said: "We are unashamedly sustaining public expenditure at a time when there is a global economic downturn to support the economy.

"We will return the public finances to a sustainable pathway after the recession is over and we'll do that in a fair way."

TUC general secretary Brendan Barber defended the Government's handling of the economy.

He said: "It is absolutely right to let the deficit grow.

"When companies and consumers stop spending, the public sector must fill the gap."

In a further sign of the growing economic gloom, figures released yesterday showed mortgage lending in January slumped to less than half the level it had been a year earlier.

That was despite Government attempts to get banks lending again.

Stewart Hosie, the SNP's Treasury spokesman, said: "Gordon Brown has been left looking complacent as the Downing Street downturn plummets new depths."